Blog

Florida Court Explains Why Bitcoin is Not Money

Having just gotten around to reading the order granting the motion to dismiss in the proceedings of the State of Florida vs. Michell Abner Espinoza, the document by Circuit Court Judge Teresa Pooler, is pretty interesting. The case regarding Espinoza has been in the news for many months now, but the final ruling was just filed in July. The case has been described as defining whether or not Bitcoin is money. Regardless of any ramifications, the argument as presented by the defendant and the Judge are pretty interesting.

If you have not read about the case, in brief, Michell Abner Espinoza was being prosecuted for money laundering and unlawful money services. The US Secret Services Miami Electronic Task Force.

The US Secret Services Miami Electronic Task Force decided to swing by CraigsList (of course) and localbitcoins.com to see what they could dig up. Seeing an advertisement that explained the defendant was willing to sell Bitcoin in person for cash, the Feds thought they had uncovered something nefarious. A meeting was set up at the Nespresso Cafe where .40322580 Bitcoins were sold for $500. A few weeks later a second, similar transaction for $1000 was completed at a Haagen-Dazs ice cream store. The undercover detective inquired during this meeting if Abner would accept stolen credit cards for payment but Abner did not commit. The final operation took place in a Hotel room (unnamed) for $30,000 – along with wires and surveillance equipment. The detective showed a “flash roll” of bogus cash to Abner, and he got nervous. While Abner did not take possession of the cash, the Feds still busted him and charged him with the aforementioned crimes.

Abner, eventually walked as the case was tossed out by the Judge. Abner and his defense attorneys beat the rap not so much because the evidence against him was tenuous at best but because the Judge decided Bitcoin was not money – as presently defined.

First, the Judge explained that Abner’s process was more like “day trading”. He bought low and sold high. A payment instrument is defined as a check, money order, cash, etc. Bitcoin or virtual currency is not on the statutory list. The Judge also noted that the IRS has classified Bitcoin as “property for tax purposes.”

The state also alleged that Abner charged a commission but the Judge pushed back quoting the dictionary definition courtesy of Merriam-Webster.

The court said that while Bitcoin may have some attributes of currency it simply does not fit into current statutory definitions.

As for the money laundering part, the court said it was unwilling to punish an individual for selling their personal property.

The Judge closed by stating;

“Without legislative action geared towards a much-needed update to the particular language within this statute, this Court finds there is insufficient evidence as a matter of law that this Defendant committed any crimes as charged.”

So has the ruling set a substantial precedent? While I am no attorney, I would guess probably not. You can expect state legislatures in Florida, and elsewhere, to be updating their definitions at some point in the future. Expect the federal government to better define digital currency too.

Ads

﻿

About Us

At Compliance Alert we combine Governance, Risk, and Compliance expertise to deliver critical information to leading decision makers in the financial and risk, legal, tax and accounting, intellectual property and media markets, powered by the world’s most trusted news organization.